A dearth of investment by governments and business has left the global economy vulnerable to a renewed slowdown, a leading thinktank has warned as it slashed its forecasts for the United States.

The Organisation for Economic Cooperation and Development (OECD) said the recovery since the global financial crisis had been unusually weak, costing jobs, raising inequality and knocking living standards. In its latest outlook, it saw global growth gradually strengthening but not until late 2016 will it return to the average pace of pre-crisis years.

The Paris-based thinktank noted a slowdown for many advanced economies in the opening months of 2015 and singled out a sharp dip for the US, the world’s biggest economy. It cut its projection for US economic growth to 2% this year from a forecast of 3.1% made in March. For 2016, US growth is seen at 2.8%, down from the previous 3% forecast.

The world economy is muddling through with a B-minus average

OECD chief economist Catherine Mann

The OECD is cautious, despite hoping that the weakness in the first quarter of this year was down to temporary factors, such as unusually harsh weather in the US.

“The world economy is muddling through with a B-minus average, but if homework is not done and with less-than-average luck, a failing grade is all too possible,” said OECD chief economist Catherine Mann.

“On the other hand, how to get the A is known and within reach,” she added, highlighting the need for more investment.

On the upside, the OECD expected growth to be shared more evenly across regions of the world and says labour markets continue to heal in advanced economies while risks of deflation have receded.

“Yet, we give the global economy only the barely-passing grade of B-,” said Mann.

The dissatisfaction is not just down to an “inauspicious” starting point after a weak first quarter, she added.

“Even if we are right about the transitory nature of the latest bout of weak growth, the outlook is not satisfactory. Despite tailwinds and policy actions, real investment has been tepid and productivity growth disappointing. By and large, firms have been unwilling to spend on plant, equipment, technology and services as vigorously as they have done in previous cyclical recoveries. Moreover, many governments postponed infrastructure investments as part of fiscal consolidation,” Mann wrote, in the latest OECD economic outlook.

The thinktank predicted investment growth will pick up across the group of 34 OECD countries but warned that alone is not enough to solve problems that built up during the crisis.

“Whether investment accelerates in line with our projections is a key question hanging over the improving outlook that we depict. Moreover, even if it does, this would still be insufficient to deliver the strong global growth in the near term needed to increase employment and reduce inequality; potential output growth would still look anaemic compared to past decades,” wrote Mann.

US downgraded, eurozone accelerating

The OECD sees US GDP rising 2% this year, down from a forecast of 3.1% made in March. For 2016 it projects growth in the world’s largest economy of 2.8%, down from a previous forecast of 3%. Photograph: OECD Economic Outlook 97, June 2015

“Stronger investment is needed to revive labour productivity, wages and competitiveness, and to balance the housing market,” said the latest report.

The OECD predicted that UK economic growth will continue at a “solid” pace in 2015 and 2016, boosted by domestic demand. But it trimmed its forecasts from March’s assessment. It now forecasts growth of 2.4% in 2015 rather than 2.6% and growth of 2.3% in 2016 rather than 2.5% pencilled in back in March.

Eurozone unemployment still high

The OECD said that while growth is picking up in the eurozone, unemployment remains high. Photograph: OECD

In the eurozone, economic growth is forecast to accelerate from at 1.4% this year to 2.1% next year, up slightly from a 2.0% forecast for 2016 made in March. Support will come from lower oil prices, the depreciation of the euro, improving financial conditions, loose monetary policy and a pause in fiscal tightening. However, unemployment will decline only gradually, the OECD added.

The thinktank noted “failure to reach a satisfactory agreement between Greece and its creditors” among the extraordinary risks to its outlook. Other risks include geopolitical upheavals, “severe financial instability brought about by a disorderly exit from the zero interest rate policy in the United States” and a “hard landing” in China.

“Avoiding these risks and moving the global economy to a higher and more stable growth path require mutually reinforcing monetary, fiscal and structural policies,” the report said.